The US dollar tumbled today against most major rivals and relinquished last week’s gains amid concerns about US President Donald Trump’s tariff policies and their impact on growth and inflation.

The dollar was hurt after Trump announced plans to double the steel and aluminum tariffs to 50%, while China and the US traded criticism and accusations of violating the recent trade agreement in Geneva.

US Treasury Secretary Scott Bessent said both President Trump and his Chinese counterpart will talk on the phone soon, and assured the markets that the issues will be solved. 

High Selling Pressures 

The dollar tumbled 0.8% to 142.85 yen, almost erasing all of its gains on the yen last week, while the euro rose 0.8% to $1.14355, the highest since late April, as analysts now await the European Central Bank’s policy meeting and decisions this week. 

The dollar extended its losses after data showed US manufacturing shrank for the third straight month in May, while European manufacturing is showing signs of stabilization. 

Dollar’s Losses

The dollar index fell 0.6% against a basket of major rivals to 98.75, approaching a three-year nadir at 97.923.

The US dollar suffered weeks of volatile trading due to Trump’s changing tariff policies, amid persistent concerns about a US recession.

It fell 3% in the week after the Liberation Day’s tariffs in April, andfell 1.9% in the week after Trump’s threats to impose 50% tariffs on EU goods.

The dollar had a transient recovery last week as the US resumed trade talks with the EU and a US trade court suspended Trump’s tariffs, but a day later, the appeals court stayed the tariffs.

Goldman Sachs expects that 10% tariffs will continue to apply on major US trade partners, in turn bolstering the “sell America” narrative as investors flee US assets.

And this week, the Senate will discuss Trump’s tax reform bill, which could add $3.8 trillion to the US government debt pile in the next 10 years.

A particular sticking point in the bill in section 899, giving the US freedom to impose taxes on corporations and investors from countries that impose “unfair taxes” on US goods and companies.

Such a bill would massively hurt global investor sentiment and interest in the US market.

Silver prices fell over 2% in European trade on Tuesday away from eight-month highs on profit-taking as the dollar rebounds against major rivals. 

It comes ahead of crucial US labor data, which would provide clues on the odds of the Fed rate cuts this year. 

Prices

Silver prices fell 2.2% today to $33.97 an ounce, with a session-high at $34.77.

On Monday, silver rose 5.5%, the second profit in three days, and the largest in 2025 on strong retail demand. 

US Dollar

The dollar index rose over 0.35% on Tuesday away from six-week lows 99.58 against a basket of major rivals.

The dolar’s recovery comes as the Trump administration seeks to calm recent jitters with China and restore business confidence in the US.

The White House said President Donald Trump and his Chinese counterpart will speak this week after days of mutual accusations of violating the trade agreement in Geneva.

US Rates

Fed official Christopher Waller said rate cuts later this year are still possible even if Trump’s tariffs lead to price pressures.

According to the Fedwatch tool, the odds of a Fed 0.25% June interest rate cut stood at 2%, while the odds of a July rate cut stood at 24%.

Now traders expect 50 basis points of US rate cuts overall this year, starting October.

the eurozone consumer prices rose 1.9% y/y in May, below estimates of 0.2%, and down from a 2.2% rise in April.

core prices, excluding food and energy, rose 2.3%, below estimates of 2.4%, and down from 2.7% in the previous reading. 

Swiss consumer prices shrank 0.1% y/y in May, the first such contraction since March 2021, matching expectations. 

On a monthly basis, prices rose 0.1% as expected. 

Such data powerfully bolsters the odds of a Swiss interest rate cut in June.